Will the bell toll for Google advertising?


What began with ancient Egyptians carving notices onto stelae has taken on various incarnations in the 4,000 years between then and now. Each time a new platform has been introduced- from print to TV- its predecessors have been marginalised, if not displaced altogether. But what happens if one of the most modern mediums is already on the wane before we have a suitable replacement?
Spurious, attention-seeking introductions aside, let’s get one thing straight. Online advertising is going nowhere. In fact, it’s on the rise. Nevertheless, a recent study conducted by eBay must make for troublesome reading in the eyes of web ad giants like Google, as one look at the digital media headlines this week goes to show.
If you missed out, basically eBay has claimed that removing paid for search advertising from its marketing mix made no difference to sales. Apparently, its customer base is loyal enough and the brand strong enough to guarantee a constant stream of customers who, with or without prompts, would end up on the website, whilst the company will always appear organically high on the results page.
According to Reuters, or what online search expert at the University of Washington Oren Etzioni told the press agency, Google, which brought in $30billion plus from advertising last year, and its rivals, should be worried. Furthermore, he also pointed to the fact that his own online shopping service Decide.com, a much smaller operation compared to eBay, found similar results when analysing the impact of buying advertising from Google.
So what does this mean? Countless small organisations use this kind of advertising, and without it internet users would be more likely to miss any online reference to their brand. If these firms had resources for a dedicated SEO team and great digital content then they would (hopefully) already be utilising that for better organic results, meaning this recent news probably won’t sway them from Google Adwords.
That said, the New York Times seems to think differently. In an article last October, the paper interviewed a guy named Tom Telford, who co-founded a holiday rental firm called Blue Creek Cabins in 2001, when it cost 60 cents per click on Adwords. Nine years later, his new firm, Cedar Creek Cabin Rentals, was paying $1.25, or $140,000 per year for the same service. The rising popularity of Adwords has led to increased competitiveness, and higher rates, along with bigger profits on the part of the seller.
Clearly then there could be an issue developing here. On the one hand, this type of commercial offering might not be best practice for huge companies. And they currently spend a lot- with Amazon reported to have shelled out $54million in 2010 on Pay Per Click. Meanwhile, smaller businesses are finding budgets increasingly squeezed when it comes to such digital endeavours. And there’s only so far this can go until something finally snaps. That may be some time down the line, but if the situation continues then surely it’s pretty much an inevitability?
It’s not all doom and gloom, mind. The same NYT story also suggests local and niche companies, or rather local and niche targeted advertisements containing stand-out (not to mention highly relevant) content, fare best when it comes to Adword success. Unfortunately, this means everyone and their one man operation is now obsessing over fine tuning and perfecting copy, design, and keyword focus, so the marketplace remains ferociously aggressive, but the fundamental point is the service can still be made to work well for certain businesses. But, in a world wherein reduced profits of any kind can mean dramatically falling share prices, not last in terms of dotcoms, what would even a marginal drop in revenue mean to Google as a whole?
Image (C) Ceris42 on Flickr